Tuesday, June 10, 2008

If you let the fox guard the henhouse, expect a lot of dead chickens everywhere

The tax manager charged as the mastermind of the biggest fraud in the District's history helped play a role in designing the agency's computer system while she was allegedly stealing millions of dollars a year, current and former employees said.Following Harriette Walters's input, officials left her small unit out of the new software system, making it easier for her to escape detection as she allegedly produced fake checks that prosecutors say amounted to $50 million.

Directors in the scandal-plagued tax department now want to scrap the $135 million system rather than try to upgrade it to make it more secure. The chief financial officer's technology manager says the system, installed between 2000 and 2004, is too outdated and clumsy to be worth fixing.

Before her arrest in November, Walters was a 26-year tax employee known among her colleagues as a problem solver with a knack for finding solutions by using the department's antiquated and balky computers or finding a way around them. Although she did not have final say over the new Accenture Integrated Tax System, Walters contributed to the decision that her unit, which handled real estate tax refunds, be left out of it.

Chief Financial Officer Natwar M. Gandhi has budgeted $10 million for a search for a new program that can process the city's income, business and real estate taxes. The Accenture computer system is not directly to blame for the embezzlement scandals that have racked the agency, officials said. Rather, the fault lies with the decisions of what was left out of it.

"It was the things that were not included that cost us," said Mike Teller, who took over as Gandhi's technology chief in 2005. "The specification did not include things that, in hindsight, should have been included."

Those decisions by officials were made under dire conditions, and with an alleged mole in their midst.

Walters's guidance came at a critical time in setting up the computers, which were designed to help lift District finances from the 1990s nadir of near-bankruptcy.

The convoluted way that the District of Columbia has to govern itself without being an actual "city" with a clear and defined relationship to an entity like the State of Maryland or the State of Virginia between it and the Federal government--or, better yet, actual STATUS as a STATE--means that this kind of thing will continue into perpetuity. Having a state government above it between it and the Feds wouldn't solve every problem, but it is nice when a regulator can pop in from time to time and encourage the city to do things that actually make sense. Like keep the tax manager under some kind of scrutiny. And, you know, audit the finances. And, maybe, just maybe, catch the people who are robbing the city blind. For years on end.

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